Both the restaurant and food service industry are fast paced environments that involve constant turnover. From managing inventory to sales tax, salaries, tips, and supplier costs, it can be easy to get caught up in daily tasks and lose track of your accounting. This is where the help of a specialist tax accountant becomes so valuable.
While you may associate visits to the accountant with the end of the fiscal year, a restaurant focused accounting firm can actually provide ongoing services from month to month. Whether you are a franchisee, a small business owner or operate multiple food outlets, your tax accountant can assist across a wide variety of different areas.
The restaurant industry also has a specific set of tax regulations and obligations that each business owner must adhere to. Of course, these guidelines will vary from state to state and this should be common knowledge to the accountant.
Without further ado, let’s dive into 8 ways a tax accountant will assist with your restaurant finances.
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1. Settling Your Books
If you don’t already have a regular tax accountant, chances are your books are in dire need of thorough review. Remember, this should always occur before you the yearly tax return is submitted. While business owners often have the best intentions to keep track of financial records, it also natural for other responsibilities and duties to get in the way.
Working with an experienced tax accountant ensures that when the time comes to submit a return, there are no underlying errors or complications. This process can be completed in situations where the business already works with a CPA. In any case, a clean-up/review not only helps to resolve documentation issues from the past, but it also sets your business up for the future. This way, you can move forward with clarity and navigate the next financial year with confidence.
2. Managing Accounts Payable and Receivable
From family chains to food trucks, corner restaurants and franchises, running a food service business of any kind requires you to keep track of accounts payable and receivable. This is particularly important if your business deals with a number of different suppliers, or you manage multiple restaurant locations simultaneously.
Let us quickly explore the other side of the equation – what effects will improper account management have on your restaurant? The first major impact relates to cash flow. A failure to keep track of payable and receivable income may affect your bottom line. Second, an inability to remain up to date with invoices and payments is likely to damage relationships with vendors.
3. Cash Flow Management
Following on from our previous point, tax accountants and advisors also help to organise and sure up your cash flow management. The inability to effectively manage the money coming in and out of the business leaves many out of pocket – before their operation even gets off the ground. In this case, external analysis from a restaurant accountant may be the difference between long-term success and collapse.
A reputable accounting firm should be able to provide practical advice on the long-term viability of current processes – be it costs associated with supply, sales, payroll, or any other key business operations. Ultimately, this working partnership is both beneficial for tax purposes and the long-term success of your business as a whole.
Remember, insufficient cash flow is one of the major reasons why businesses fail in their initial years.
4. Sales Tax Compliance
As a restaurant owner in the US, you are generally required to pay taxes to the federal government. Not only will you have to report and pay tax on your personal income, but also ensure that any business related taxes are paid on time with accurate reporting.
Sales tax compliance is essential for any business in the restaurant or food service industry. Failure to file a valid sales tax return on time will result in added interest and penalties. Therefore, reaching out to a seasoned restaurant accountant is highly beneficial for this area.
If you do not have a tax accountant on staff, there are generally two avenues available. First, your business can enlist accounting services for a year-end round up and finalizations. The other pathway relates to accounting firms that provide ongoing reporting and analysis of tax compliance. This strategy is a great way to take the stress out of tax time, whilst allowing for the easy collation of monthly data.
5. Ongoing Analysis & Reporting
While individuals typically visit the accountant on a once-a-year basis, the story is different for many businesses in the restaurant industry. A restaurant has to simultaneously manage and balance revenue, expenditure, payroll, sales tax, marketing, bookkeeping, and countless other financial aspects. Without an in-house accountant, therefore, financial management can quickly fall by the way side.
Ongoing analysis allows the restaurant owner to focus on daily operations, while the accounting firm concentrates on the key financial aspects. This may be in the form of a monthly, quarterly, or 6-month audit. Regardless of the frequency, reporting will provide critical financial information that allows the owner to better understand where they sit. In addition, this process also allows for the ongoing analysis of business trends – i.e. is the restaurant receiving the most business during breakfast dinner, or the lunch rush.
6. Payroll Services
Payroll is one of the fundamental expenses of running a restaurant or food service business. As such, accuracy and best practice are essential. Any issues with delayed or inaccurate payments will not only result in employee dissatisfaction, but also raise the possibility of legal action. If your restaurant does not have a regular tax accountant to manage this area, reach out to an experienced restaurant accountant as soon as possible.
Experienced accounting firms will handle the tedious task of payroll management, whilst ensuring accuracy across all levels. In addition, an accountant’s assistance will also help to guarantee that payroll is processed on time and no unwanted issues arise.
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7. Data Migration
Data migration relates to the selection, extraction and transfer of existing information to another location. In the field of restaurant accounting, this typically involves a shift from desktop accounting software to cloud based sharing. Ultimately, data migration is designed to aid processes related to year-end sales tax, payroll and bookkeeping.
If your restaurant already uses a modern point-of-sale system, this process is inherently easier for all parties. Your accountant/accountants may be able to utilise all of the information available and create a centralized database through accounting software (often through cloud sharing technology). Under this arrangement, you may also be able to upload documents yourself.
Unfortunately, manual documentation is both time consuming and prone to human error. Opting for cutting-edge accounting software reduces the chance for these numerical issues and missteps.
8. Budgeting & Forecasting
The food service industry is fast paced and highly competitive. Without the proper financial preparation and planning, even the most prominent food chains may struggle to retain a sustained level of success. This brings us to the importance of budgeting and forecasting, another key part of the tax accountant’s arsenal.
Through careful financial analysis, a restaurant accountant should be able to identify areas of strength and areas that require work. Depending on your needs and circumstances, budgeting may occur on a yearly, quarterly or monthly basis.
Forecasting involves the anticipation of revenue and expenditure over a designated period. The data provided will help to determine future business decisions, strategy and detect opportunities for growth.
Remote Accountant Services
If you cannot access a firm in your local area, keep in mind that many accountants now offer remote services. As there are no physical boundaries or limitations, this arrangement can significantly speed up the process and ensure that all relevant documents are filed on time for end of the fiscal year.
A remote accounting firm is also a viable option for companies that already work with a registered CPA. From ongoing analysis to payroll, bookkeeping and data migration, this additional assistance will help your restaurant to prepare with any CPA appointments and ultimately make their job easier.
This is becoming a popular pathway for busy business owners in the food service industry that lack the time or resources to manage finances internally.
Reach out to a Registered Tax Accountant Today
As we have explored, a tax accountant can help restaurant owners across a wide variety of different areas. From cash flow management to sales tax, payroll services, budgeting and much more, their services often go well beyond the preparation of a once-a-year tax return.
Restaurant owners are generally best served by partnering with accounting firms that industry specific solutions. This means that they should have direct experience in the financial side of the food service industry.
Due to technological advancements, cloud sharing and video meetings, restaurant owners are no longer limited to the local tax accountant in their neighborhood. Of course, it remains important that the firm you select has knowledge of the tax regulations in your area/jurisdiction.
